Revaluations and Capital Gains in the Context of Natural Resource Accounting
Tension exists between national accounting practice (in which capital gains are not counted as part of national income), and the theory of national income definition and interpretation (in which capital gains are often argued to be a component of national income). Much of this theoretical work arises in the context of research into natural resource accounting, where capital gains arise endogenously as natural assets are depleted. In this paper, the appropriate treatment of capital gains in a variety of circumstances is presented. I argue that views on the inclusion (or not) of capital gains are contingent on the underlying interpretation being applied to national income. Capital gains matter when income is interpreted in sustainability terms, rather than in its traditional guise as a measure of the value of output. Even when income is given a sustainability-related interpretation, different views on gains arise from different presumptions regarding the type of gain (the source of the asset price change). Further disagreements in the literature are shown to turn on the time perspective adopted by the individual analyst. The measurement of capital gains varies with the adoption of a present-value versus a current-value perspective. Using this insight, I resolve a number of conflicting claims in the literature. I also raise the neglected issue of revaluations arising from obsolescence, something hitherto neglected in the context of natural resource accounting.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Asheim, Geir B, 1994. " Net National Product as an Indicator of Sustainability," Scandinavian Journal of Economics, Wiley Blackwell, vol. 96(2), pages 257-265.
- T.K. Rymes., 1992. "Some Theoretical Problems in Accounting for Sustainnable Consumption," Carleton Economic Papers 92-02, Carleton University, Department of Economics, revised 1993.
- Kjell Arne Brekke, 1997. "Hicksian Income from Resource Extraction in an Open Economy," Land Economics, University of Wisconsin Press, vol. 73(4), pages 516-527.
- Common, Mick & Sanyal, Kali, 1998. "Measuring the depreciation of Australia's non-renewable resources: a cautionary tale," Ecological Economics, Elsevier, vol. 26(1), pages 23-30, July.
- Asheim, Geir B., 1996. "Capital gains and net national product in open economies," Journal of Public Economics, Elsevier, vol. 59(3), pages 419-434, March.
- Dan Usher, 1973. "The Measurement of Economic Growth," Working Papers 145, Queen's University, Department of Economics.
- Vincent, Jeffrey R. & Panayotou, Theodore & Hartwick, John M., 1997. "Resource Depletion and Sustainability in Small Open Economies," Journal of Environmental Economics and Management, Elsevier, vol. 33(3), pages 274-286, July.
- Karl-Göran Mäler, 1991. "National accounts and environmental resources," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 1(1), pages 1-15, March.
When requesting a correction, please mention this item's handle: RePEc:trb:wpaper:2001.08. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Stephen Scoglio)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.